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January 30, 2014

Where the Wealthy Are Investing in 2014: Morgan Stanley Poll

After strong 2013, affluent households expect more of the same this year

A big majority of high-net-worth American investors are looking forward to a strong year despite worries about the U.S. economy, the budget deficit and geopolitical tensions.

A Morgan Stanley investor pulse poll, released Wednesday, found that 88% of investors expected their financial wellbeing to be better or the same as in 2013.

Nearly as many expected their investment portfolios to be better or the same, and 70% saw a better or similar investment climate.

GfK Public Affairs polled 1,004 U.S. investors, age 25 to 75, with $100,000 or more in investable household financial assets during the fourth quarter. A third of those interviewed had $1 million or more in household financial assets.

“The experience of 2013 has not been lost on investors,” said Gregory Fleming, president of Morgan Stanley Wealth Management and Morgan Stanley Investment Management, said in a statement.

“Despite a great deal of economic uncertainty, equity markets performed strongly as expectations accelerated for economic growth, and investors are looking for more of the same in 2014.”

Investors expected to end 2014 with 42% of their portfolio dedicated to equities, including stocks, mutual funds and ETFs.

They said 23% of their allocation would go to cash, another 23% to fixed income and 13% to all other investments.

Millionaire investors said they expected to commit an even higher allocation, 50%, to equities.

The highest percentage of investors favored dividend-bearing stocks and various index funds as good investment prospects. Continuing caution was also evident, as three-quarters of investors saw gold as a “good” or a “neutral” investment.

The survey found that millionaires were relatively more bullish than lower-net-worth investors on financial services, health care, industrial and the consumer discretionary sectors.

Respondents planned to stay focused at home this year, with 52% favoring the U.S. as a place to invest. Forty-one percent were inclined to invest in China, 39% in India, 38% in Japan and 34% in Brazil.

The Middle East and Russia received the highest negatives as places to invest among survey participants, with 67% rating the former as “bad” and 54% saying the same about the latter.

Despite their overall bullishness, 90% of respondents were very or somewhat concerned about prospects for the American economy, 87% about the government budget deficit, 82% about increased foreign conflicts, 81% about the U.S. trade deficit and 75% about the effects of terrorism on the nation.

However, only 48% of investors said they were very or somewhat concerned about the stability of their employment. Slightly more than a quarter worried about being a financial burden on their children, or having their children be a financial burden on them.